What Percentage of Income Should Go to Retirement?

What percentage of income should go to retirement?

There is no blanket answer. Anyone giving you an exact percentage for everyone is guessing.

Retirement, or chapter two, is customizable. It depends on your income needs, your existing guaranteed income streams, and your overall financial situation.

Key Takeaways

• There is no universal retirement percentage rule
• The industry guideline suggests no more than 50 percent of investible assets in annuities
• Social Security, pensions, and RMDs function as annuity type income
• Retirement planning starts with defining your income floor
• Annuities should be used to contractually solve a specific income gap

Is There a Standard Retirement Percentage?

No.

There is no fixed percentage of income or portfolio that automatically belongs in retirement planning.

The general industry guidance is that you should not put more than 50 percent of your investible assets into annuities.

Investible assets do not include your house, your car, or personal property. The 50 percent number is a ceiling, not a target.

What Counts as Retirement Income You Already Own?

A lot of people already own annuity type income and do not realize it.

These include:

• Social Security
• Required Minimum Distributions from IRAs
• Pensions
• Dividend income

Social Security pays for life. Required Minimum Distributions happen every year once they begin. Pensions provide ongoing income if available.

All of these need to be added together before making any decisions.

How Do You Determine the Right Amount?

You start by defining your income floor.

Add up all guaranteed and recurring income sources. If that amount covers your expenses, there may be no need to purchase additional annuities.

If there is a gap, that is where planning begins.

When Should Annuities Be Used?

Annuities should be used to solve a specific contractual goal using the least amount of money possible.

They are commodity products. Multiple carriers compete, and quotes change regularly.

The focus should always be on what the annuity will do, not might do.

If you want to see what those guarantees actually look like, you can run real quotes here:
https://www.stantheannuityman.com/annuity-calculator/

What About Bonuses and Sales Pitches?

Upfront bonuses are part of the overall structure, not free money.

If something sounds too good to be true, it is.

The focus should stay on contractual guarantees and clearly defined income needs.

Final Thoughts

There is no universal percentage of income that should go to retirement.

Start by calculating your income floor. Add up the annuity type income streams you already own. If there is no gap, you may not need anything else.

If there is a gap, annuities can be structured to contractually solve that need while staying within reasonable allocation guidelines.

If you want to evaluate your current income or determine how much should be used to fill a gap, you can schedule a free consultation with The Annuity Man team.

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FAQs

Is there a universal percentage of income for retirement?

No. Retirement planning is customizable and depends on your income needs and existing guarantees.

What is the 50 percent rule?

Industry guidance suggests not placing more than 50 percent of investible assets into annuities, though exceptions may exist.

Are Social Security and RMDs considered annuities?

Yes. Both function as recurring income streams similar to annuities.

Should I buy an annuity for the bonus?

No. Annuities should be purchased for their contractual guarantees, not marketing features.